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Just how much of a role would the government have played in supporting Chrysler and General Motors if Mitt Romney had been president?
As First Read reported yesterday, the former Massachusetts governor has worked to couch his opposition to President Barack Obama's decision to bail out the two car companies -- a decision which Romney, who was raised in Michigan, is being forced to confront heading into the state's Feb. 28 primary.
Democrats and the Obama campaign have made a big issue of Romney's 2008 op-ed in The New York Times entitled, "Let Detroit Go Bankrupt," especially in light of the signs of encouragement in the auto industry since the bailout. He penned it just weeks after Obama secured the presidency.
Related: Obama touts manufacturing at Wisconsin plant
The piece, published as the automakers were facing a major cash crunch, called for what he dubbed a “managed bankruptcy.” He said the car companies needed to restructure their labor agreements; replace each company's management and rid them of corporate perks; and increase government spending on alternative energy and fuel economy research, which would benefit the industry indirectly.
Of direct government assistance, Romney wrote: "The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk." He stated, declaratively, “Detroit needs a turnaround, not a check.”
Since then, Romney has spoken publicly about the bailout, essentially trying to take ownership for the successes of the auto industry's turnaround while decrying Obama's management of the process. Romney argues that the administration basically ended embracing a variation of the strategy he originally advocated.
"The indisputable good news is that Chrysler and General Motors are still in business," Romney wrote Tuesday in The Detroit News. "The equally indisputable bad news is that all the defects in President Obama's management of the American economy are evident in what he did."
The separation between Romney and Obama on the issue of the bailout stems from two issues. First, Romney argues that interests of the labor unions were unfairly favored over some of GM and Chrysler's private creditors. The government-supervised bankruptcy did this, he argues, by allowing the autoworkers’ retirees program an equity stake in the restructured GM in exchange for providing financial support for the bankruptcy.
Second, Romney appears to differ with the president over the extent to which government itself should have stepped forward with money to help stave off liquidation of GM and Chrysler and provide for the restructuring process. The administration's approach did this in the case of GM by essentially establishing a new, restructured company in which the government became a majority shareholder. (Romney argued Tuesday for the government to divest itself from the company.)
Romney's position in the past has been that the private sector could have stepped forward to finance and more effectively manage the bankruptcy process -- especially in a way that would have treated private stakeholders in the companies more fairly.
The right-leaning editorial page of The Detroit News weighed in Wednesday:
But on the key question of whether the automakers could have managed themselves through a traditional bankruptcy without assistance from the government, Romney is wrong. The loans provided by Bush and then by Obama allowed the domestic auto industry to survive the darkest hour of its history and return to thriving operations today.
Critics also contend that Wall Street might not have been in the position to give that financial assistance to Detroit in 2009, as Lehman Brothers collapsed and global credit tightened.
But Romney appeared to add more uncertainty into his position surrounding the bailouts in an interview Wednesday on Detroit talk radio station WJR. Romney said that the government should have been available to step in and provide financing during a structured bankruptcy by way of a bridge loan -- the initial way in which the Bush administration propped up GM and Chrysler at the end of 2008.
Romney explained:
They needed to go through bankruptcy, and if, as part of that process, they needed financial help to get out of bankruptcy -- a bridge loan, or guarantees on sales of cars and so forth -- I said the government should be there to provide that. But the point was they took the wrong process, they wasted a lot of money, and ended up giving the companies to the UAW.
That doesn't necessarily mean that Romney would have pursued the exact path as the Obama administration for restructuring GM and Chrysler, but it does indicate some willingness for a more expansive role for the government during bankruptcy. Spokesmen for the Romney campaign didn't immediately respond to an inquiry seeking clarification.
But in addressing some of the political flak he's taken over the bailout, Romney added on WJR: "I don't imagine that anyone could think I had any interest other than to see the companies to thrive and survive, and that's why the original op-ed piece I wrote describes what I thought was the best way to get that done."
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Romney wanted the car companys to go belly up, and now that they are doing good he is eating crow. He will lose the nomination because of this. Thank you Mr. Obama for saving these two great car makers. Obama 2012!!!
You are a liar. Romney said and I heard it in his own words just last night. He would have allowed a structured BK and recapitalization by wall street. You dont think that happens all the time? Look at AMerican Airlines just last month. They went BK, restructured and continued to fly. The problem with you nits is you are too stupid to understand you are being treated like a tool by Obama and his cronies.
And exactly where was that capitalization going to come from while the banks were going belly up and had to be bailed out by TARP? Even the Chinese backed out of a deal for Saturn, which was one of the best run divisions of GM.
One thing for sure .....he would not have put the UAW above the legal debt holders as Obama did. Bond holder lost millions because of that........and the UAW had a gain. How you say ..:thanks for your support when you are President....
Why did those bond holders let stupid management ruin their bonds? And just how did the UAW gain? Answer the first question, before the second question. I would like to see some real FACTS on this, not Murdock's faux talking points.
@1Hiram
Stop focusing on one minor issue and look at the big picture. Those who believed that we should have let GM fail are not thinking of the broad reaching intrinsic value of saving GM and its impact on the entire US economy and culture. I get really annoyed at these armchair experts who simply say, “Shut down GM and destroy the pension benefits of the workers” with nary a thought of the social consequences. These people who view everything through the prism of “the MARKET” and financial models and nothing else. If GM ends up in bankruptcy (Chapter 7), which would entail total liquidation. The company would close its doors, immediately throwing more than 100,000 people out of work. And, according to experts (economists psychologists and sociologist), the damage would have spreaded quickly. Automobile parts suppliers in the United States rely disproportionately on GM’s business to stay afloat. If GM had shut down, due to such a drastic and sudden decrease in demand many if not all of the suppliers would soon follow. Without parts, Chrysler, Ford, and eventually foreign-owned factories in the United States would have to cease operations. The nation’s assembly lines could have gone silent, sending a chill through their local economies as the idled workers stopped spending money resulting in increased crime rates. Gun sales would have gone thru the roof. Did we really want to light such a fuse and start a social revolution? Is this the kind of country we want to live in?
Likewise, everybody is now saying “they should have used Chapter 11 to sort out Detroit, like we did for the airlines”. Well, that might in fact may have been worse, Chapter 11 may have reinforce some of Detroit’s worst habits–starting with its tendency to seek the lowest prices from parts suppliers, even if that means switching companies frequently and paying relatively little attention to part quality. Toyota is famous for taking the opposite approach: It eschews easy savings in order to maintain long-term relationships with suppliers; these relationships, in turn, allow Toyota and its suppliers to collaborate on design and quality. It’s precisely the sort of production technique that the Big Three recently adopted. But, in a Chapter 11 filing, under pressure to improve the bottom line as fast as possible, they’d be unlikely to do that. That’s assuming they even make it to Chapter 11. In the more likely event that GM had to shut down altogether under Chapter 7, as most experts predicted without the bailout, the company’s institutional knowledge would end up on the proverbial shop floor. Among the casualties would have been the Volt and any near-term hopes of any new marketable plug-in from the domestic auto industry.
Fortunately, due to their near death experience the UAW is changing and so is Detroit. GM actually is producing some good cars now, but their financing practices (like everybody else in America) had initially cannibalised a source for future demand but that's turned around now. According to the most recent Harbour Report, the benchmark guide for manufacturing prowess, Chrysler’s factories now match Toyota’s for the most productive, while both Ford’s and GM’s are improving. Of course, GM's progress is incomplete, and they still have a lot to learn but I prefer this picture than what it may have been if we didn't bail them out. I am a financial analyst and hate to be opinionated as it goes against my professional discipline, but it appears that rightwingers appear to be sort of selfish and short-sighted.
Wake up......GM did declare bankruptcy!!!! The difference was instead of a normal bankruptcy hearing......with private investment.....the government handled the restructuring. Bond holders who invested ....in good faith....were screwed ob the administration. Obama paid off the UAW first instead of after the debt holders. The same was done at Solyndra with his friends who invested!!! The UAW has assets over a $1 Billion.......even have their own $35 million golf resort in upper Michigan. Also by the government intervening the UAW did not have to renegotiatetheir contracts.....or give many concessions. TARP has mostly been paid back......we will never be paid back from GM and Chrysler. This is not ancient history......where have ya'll been????
If Repulicans think Romney is a factor anyway, or Gingrich, or Santorum or Paul, they are pissing in the wind. Republcians are notorious for putting a stooge up against a sitting president and getting the crap kicked out them ie; Goldwater and McCain. Barry Goldwater was probably the most conservative mind since the constitution was written but Kennedy money machine buried him. What is very likely to happen is a nomination from the floor at Tampa of someone strong enough with the expertise to out duel Obama in media debates and skills of economic and foreign policy. America is being doped by lies and false statistics because they want to believe and Obama has the sales abiltity with the media behind him to fool us as long as we don't look at real facts, not fabricated lies.
GA a few things happened that will almost insure that no one from the GOP is elected as President this year Among them are: (1) the GOP exposing their desires to control female contraception; and (2) the deficit reduction (austerity measures) that the UK and other European countries took sent their economies into major nose dives, soaring unemployment and/or double dipped recessions. This is what the GOP initially recommended and our economy would have been decimated along with the suffering they are experiencing in Europe now.
With regard to Willard (Romney), the man unknowingly let's us know about his employment plans for US workers when he brags about his accomplishments at Bain Capital. The two companies that he constantly brags about saving are Staples and Sports Authority, retail establishments, who sells the crap that his friends are manufacturing in Asia.
Throughout his 15-year career at Bain Capital, he bought, sold, and merged dozens of companies. Willard had other chances to fight to save jobs, but didn't. His ultimate responsibility was to make money for Bain's investors. Those businesses closed included office supply, steel, textile, giftware, medical equipment manufacturers and etc.
In short, he rid the country of real equity creating, wealth building companies that paid well while also decreasing the country's gdp. Although he did save one steel manuafacturer, Steel Dynamics Inc., he helped close two other much larger steel manufacturers Ampad and GS Industries.
His actions above tell me what his objective would have been with GM. He wanted to get rid of GM and invest in the foreign companies that replaced it, reduce our incomes in the process and give us credit beyond our ability to repay it to buy those foreign made cars to increase his dividends. (This is what the rich, so called job creators, are doing with their tax savings.)
bottom line on this whole auto maker episode is that it shows what a terrible president Romney would be.
he was wrong about it in 2008 and he still doesn't get it. the whole "I was for the bailout before I was against it" line is a pathetic and transparent attempt to rewrite history.
not only is Romney showing us he would have made the wrong choice but he is now trying to weasel his way into the success.
he has no instinct and no integrity, plain and simple
If G.W. Bush gave them support (27Billion), then Romney would have bailed them out too! Like most right wingers, he talks out of both sides of his a.s.s.hole!
AND yet, somehow Obama never mentioned that Bush helped them to the tune of 27B. Not once did he mention Bushs contribution to keeping the auto companies solvent. As is typical of all Libs, they only take credit, never blame and they never praise good jobs by anyone but fellow libs.
Romney was absolutely correct on this issue. The auto companies would still be here if the current administration hadn't given them taxpayers money; Obama also illegally put union workers before creditors during the bankruptcy. We, the taxpayers still own over 30% of GM and two thirds of what uset to be GMAC, now known as Ally bank.
Do you see a pattern here? The GOP could care less about helping the economy or the mdidle class or about bringing manufacturing and business back to this country where it belongs. I am sick and tired of everything I pick up being made in China and I go through great lengths and am willing to pay more to buy American. Wake up America and make sure you vote President Obama in for another 4 years because if you don't the middle class and everything this country stands for will be gone. The choice of the GOP candidates is pitiful and even if I were Republican I would not vote for any of them.
What a dumb post. The left has pushed manufacturing overseas with onerous, ultra-environmentalist legislation, hundreds of new laws by Pelosi, Reid, and Obama restricting business, the second highest tax rate for business in the world, and the threat of "cap and trade." Obama and the democratic Congress has caused the massive unemployment that America now experiences; they have curtailed business and growth. A vote for Obama will further hurt the middle class and the working person; Obama's class warfare and re-distribution of wealth is destroying America.
As an Independent and as someone that issues with both parties..it never ceases to amaze me of the BS that comes out of you koolaid drinkers mouths. Regurgitated hog wash. The 35% tax rate in this country is a myth. Haven't you been paying attention? Apple is challenging Exxon-Mobil as the richest company on the planet. They are sitting on $100B and all of the their products are made in China. In 2011 that made a total of $108.6B. After all expenses they had a pre-tax income of $34.2B. They paid taxes of $8.3B Take out your calculator. That's a tax rate of 24.2%. I paid 21% on a whole hell of a lot less. But don't take my word for it...their symbol is AAPL..go to CNN Money, put in that symbol and click on Finances. It's their for the whole world to see. Except morons like you.
I don't know whos steering their ship for(the repugnants), but , betting on the economy to fail, as early as they did, was foolish, even with ALL the Roadblocks they put up, to compel the economy to tank. Just imagine what could have happened if they actually gave a damn about our country? Now they swagger around (Like the SNL Churchlady), acting all righteously indignant over contraception?? Are they freakin kidding? If that doesn't come back to bite them in the ass, I don't know what will? What a Sham and a Farce.
Once again the libs lied for so long. All I heard was Romney would have let the auto company go out of business and leave 2M workers unemployed. WHAT A LIE. I heard what he said and he was saying an organized BK in which private capital comes in and reorganizes the companies. Just a month ago, American Airlines did just that. No layoffs, no nothing just restructuring of debt and renegotiating contracts. The president and the liberal media mistated what Romney wanted to do. Meanwhile you asswipes talk about record numbers for the auto industry. Serious question, why did Ford also have record numbers? Because America's attitude is changing and people want to buy American autos. Under the Romney plan, american tax payers would not have lost over 20B helping the unions and auto industry. Capitalists would have restructured the company and used their own money. You libs really suck and worse then that, you lie and believe the lies you tell.
The absolute folly of this bailout has come full circle in 2 days. Yesterday, amid gloats of GM being the biggest and the baddest auto maker, GM completely redefines the pension plan for all their salaried workers. If GM had gone bankrupt and a similar event had befallen the poor UAW workers, the hue and cry would have been deafening. Why did salaried workers have their pensions changed? Because, according to GM, "their" pensions were "unsustainable" and too threatening to investors. Of course, at the same time, UAW members will get $7000 profit sharing checks for their stellar work. Apparently the taxpayer had nothing to do with this "profit". But wait. GM paid back their bogus bailout! Wrong. The taxpayer owns 500 million shares of GM, and the stock would have to double for the treasury to just break even. This 500 million shares is one-third of the company - if the Obama administration wanted to protect the salaried workers, all they had to do was say so and squelch the salaried pension change. But no - these are non-union people, not the pure-as-the-driven-snow union members. This is little different from the supplemental to Obamacare a few months back that gave over $200 million to the UAW to pay the costs of its union members health fund... The UAW isn't paying for that either - the taxpayer is. For the final time - this was not a bailout of the auto industry. It was a bailout of the UAW and the UAW only. Anyone else "benefiting" from this bailout was simply the victim of random luck. Oh, and if you don't think any of the above is true, I used to be a member (by closed shop rules) of UAW 974. At some point people need to understand that unions don't care about anyone other than themselves. You don't have to like what I say - show me where it is wrong. And, while you are at it, count up all the union members complaining about the raw deal the salaried workers got - maybe some of their $7000 profit sharing checks could help out these workers. Please hold your breath till that happens.
WHY DOES THE REPUBLICAN CONSERVATIVE 1%ers WANT THE STRUGGLING TO PAY MORE MONEY THAN THEM ??? THAT'S THE QUESTION ??? well, it's because the trickled down economic republicans made them think their crap don't stink. they've been spoiled to the core, and like spoiled brats ,they are demanding that treatment from the 99%ers. haaaaaaaa haaaaaaaaa heeeeeeeeeheeeeeeeeeeeeee they're killing me with that high and pious '' USA NEEDS ME '' haaaaaaaaaa haaaaaaaaaaaaa !!!!!!!!!!! USA NEEDS YOU TO DITCH ALL THOSE LOOP-HOLES THAT'S KEEPING YOU FROM PAYING TAXES '' LIKE THE REST OF US CHICKENS ''.
Zero, zip, nada. Apparently Mr. O'Brien is part of the GOP effort to recessitate the Mitster's sucko image.
I believe he already made that clear... "NONE!"
Romney would have allowed the failure of Detroit and gone in, bought the remnants, sold off the profitable portions to the highest bidders, fired most if not all the management and restructured them to be good enough to sell off and make money for himself and Bain Capital. That's it in a nut-shell!
Hum...duh....NONE!
Willard Romney would not have provided one damn cent to save the Automobile Industry in the USA, not to mention what would have happened to the suppliers to the auto industry or any of those employed by the industry and the industry suppliers.
Willard Mitt Romney is a leach, a PARASITE!
Willard Mitt Romney secured his millions $, destroying small businesses, destroying capitalism, he and Bain Capital are PARASITES, they consume but do not contribute anything of value to society!